Luciano: Concerns about hotel management switch need addressed

Hope for two things Tuesday night regarding any management change for the Marriott hotels Downtown:

1. City Council discusses at least some of the issue in public.

2. City staffers have done their homework — perhaps a lot of homework.

Council members indicate they have plenty of questions about the proposed switcheroo for Marriott Pere Marquette and Courtyard by Marriott. East Peoria-based EM Properties, the developer of the hotels, wants to boot Marriott International Inc. as manager and bring aboard First Hospitality Group, based in Rosemont.

Granted, because of confidentiality agreements, not every burp in this discussion will be heard during the regular meeting. But surely the public — via a city-authorized $29 million bond and a $7 million loan as part of the $100 million project — deserves some clue about what’s going on.

Here’s the key question: why? That covers a lot of territory.

First off, how can a management company run Marriott better than Marriott? It’s a question that triggers a lot of head-scratching, even after you hear various answers.

Gary Matthews, president of EM, says that top-tier chains franchise out their name all the time, with management handled by a third party. And he says the Pere is doing fine (the Courtyard won’t be open until next month at the earliest), but sees room for improvement.

OK, fine, I guess. But the rehabbed Pere has been operating less than a year. Matthews told me that it takes up to two years for a hotel to “stabilize.” So why kick out Marriott management so quickly? Is this typical — just pulling the plug? Or pushing the panic button?

Here’s another concern, echoed in this paper by council members: Is First Hospitality Group the best substitute? That’s no knock on the company itself; FHG manages a lot of hotel properties. But many of those are what the industry calls “select service” hotels — more economical because they don’t offer the array of services of a full-service hotel like the Pere.

But FHG is up to the task, says Thomas Maier, assistant professor of leadership and revenue analytics at DePaul University’s School of Hospitality Leadership.

“They’re very well entrenched in the hospitality circles. ... It’s not a mom-and-pop operation,” he says.

Further, Maier says a third-party manager can thrive as “independent” from a hotel’s owner and its flag. That way, he says, management is beholden to neither side.

“That’s healthy,” he says.

However, FHG’s portfolio indicates the company might need time to catch up to speed with the Pere, says Melissa Dallas, professor and former director of Missouri State University’s Department of Hospitality and Restaurant Administration. Dallas says the Pere — boasting restaurants and many other amenities — demands broader expertise than with select-service hotels. She says the City Council would do well to discuss that matter with FHG.

“I would ask them pointed questions as to how they’d meet challenges, because these challenges would be new to them,” says Dallas, past president of the International Council on Hotel Restaurant and Institutional Education. “I think that’s something to consider.”

Plus, she conjectures that a main goal for a new management team would be to goose sales. After all, she says, select-service hotels focus on volume. Further, Matthews has said FHG would increase marketing. But an increase in room sales won’t hold over time if a top-tier hotel can’t deliver on its services, Dallas says.

“You have to have deep knowledge in more areas,” she says.

That’s not to say FHG can’t do the job. But will council members’ questions be answered sufficiently Tuesday night? The proposal came to light only 10 days ago. This is the signature development Downtown. A lot is riding on these hotels.

Any change in management should be done with long-term confidence, not just in the hope of selling a few more hotel rooms.

PHIL LUCIANO is a Journal Star columnist. He can be reached at pluciano@pjstar.com, facebook.com/philluciano, 686-3155 or (800) 225- 5757, Ext. 3155. Follow him on Twitter @LucianoPhil.

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